The clean-up operation for mis-selling of endowments moved up a gear last week with publication of fresh guidance to help victims seeking redress.

Homeowners who are unhappy with their policies can now get a clear idea of whether they have a case by consulting the guidance from the Financial Ombudsman.

Just under 11 million endowment policies have been sold to around 6 million households, although not all are being used to repay mortgages. By the end of this month insurers should have written to all policyholders to tell them how well, or badly, their policies are doing. About 97 per cent - 10.4 million - of policyholders have been contacted and of these, just under 1.5 million are in a high-risk category. Their endowments must grow at more than 8 per cent a year to pay off the loans. A further 3.2 million are in a medium-risk group, where the investments must grow at between 6 and 8 per cent.

Projected shortfalls have focused homeowners' attention on what they were told about the policy when it was sold to them. The ombudsman's office is receiving between 300 and 400 complaints a week.

A projected shortfall on a policy is not, on its own, grounds for compensation. But other misdemeanours will give people a right to redress. The ombudsman's guidance identifies nearly 30 sets of circumstances that might give rise to compensation. Some of the main ones are:

 Life insurance was not required (commonly, this would be because the homebuyer was single with no dependents)

 The risk involved with the product was not spelt out properly

 The policy is due to mature after you retire

 You were persuaded to cancel a previous endowment to buy another

 You were led to believe that the policy would definitely pay off the loan

 You were led to believe that the policy was guaranteed to produce a lump sum in excess of the amount need to repay the loan. In these cases you must prove that a definite guarantee was given; if the policy documents warn that the maturity value was not guaranteed and you cannot explain why you disregarded that warning you will usually have your claim rejected

 You were advised to increase premiums in the past (possibly to pay off a shortfall) without being told of other ways to meet the shortfall.

The ombudsman will only look into a complaint after it has been lodged with the company that sold the policy and after the two parties fail to reach an agreement.

Ombudsman spokesman David Cresswell says: 'It's to try to get firms on a voluntary basis to take the same approach to the handling of cases that we would take.'

Publication of the guidance came a week after guidance was published by the Financial Services Authority on how companies should deal with complaints and calculate compensation.

The ombudsman has also set out the basis on which he will calculate compensation, giving policyholders a yardstick to measure offers.

Homeowners who bought policies from independent advisers or brokers who are no longer in business face a hard battle for compensation. In these cases it is the advisers, rather than the insurers, who are liable.Only if the adviser was an appointed representative of the insurer will the company be held responsible. Where a firm has become insolvent and declared in default by the Investors Compensation Scheme, a claim can be made on the scheme.

 The FSA consumer helpline, on 0845 606 1234, may be able to help with tracing a firm you have lost touch with. The ombudsman's guidance is published on his website at www.financial-ombudsman.org.uk.